Investors' bets to see tightening policies by the Federal Reserve (Fed) slowed and the reopening of restrictions in China finally became a reality.
Last week, Fed President Jerome Powell issued dovish comments about the prospect of interest rate hikes, easing market concerns as the global economy frayed.
Coupled with the news of the easing of restrictions in China after the outbreak of massive protests against the zero Covid policy last week has also restored market sentiment.
As a result of the positive news, the US dollar has seen half of its gains so far this year.
According to the Bloomberg Dollar Spot Index report, the greenback pared 2022 gains by 7% after gaining 16% earlier on slower-than-expected increases in consumer prices.
The index was also seen down 0.4% in Asian trade on Monday, hitting its lowest level since June 28 while other riskier currencies showed a rebound.
The decline is forecast to continue for a 5th day, the longest consecutive decline since April 2021, with news of the Chinese cities of Shanghai and Hangzhou easing restrictions starting today.
According to Christopher Wong from Overseas Chinese Banking Corp, the market began to show signs of risk-on when the Fed's comments and the reopening of China confirmed the change in sentiment.
And touching on the good US jobs data report on Friday, Wong described it as only managing to make a small bounce on the dollar so far.
